Question

Which of the following is NOT an acceptable method for treating income taxes paid to foreign countries?

a) Foreign Tax Credit
b) Foreign Tax Deduction
c) Foreign Earned Income Exclusion
d) Foreign Tax Avoidance

Answer 1

It will be letter D since avoidance mean your not trying to pay

Answer 2

The correct answer is d) Foreign Tax Avoidance. The three acceptable methods for treating income taxes paid to foreign countries are: Foreign Tax Credit, Foreign Tax Deduction, and Foreign Earned Income Exclusion.

Step-by-step explanation:

The correct answer is d) Foreign Tax Avoidance. Foreign tax avoidance refers to illegal methods or strategies used to evade paying taxes to foreign countries. It is important to note that foreign tax avoidance is not an acceptable method for treating income taxes paid to foreign countries as it is against the law. The three acceptable methods for treating income taxes paid to foreign countries are:

1. Foreign Tax Credit: This method allows taxpayers to offset their U.S. tax liability by the amount of income tax they paid to a foreign country.
2. Foreign Tax Deduction: This method allows taxpayers to deduct income taxes paid to a foreign country from their U.S. taxable income.
3. Foreign Earned Income Exclusion: This method allows U.S. citizens or resident aliens who work and live abroad to exclude a certain amount of their foreign earned income from U.S. taxation.